The Snow Forecast; Intel: The Final Vote; Interview With Senator John McCain

Aired December 8, 2004 - 15:29 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

(BEGIN VIDEOTAPE) ANNOUNCER: The Senate prepares to seal the deal on intelligence reform now that the bill has cleared the much higher hurdle in the House.

SEN. NORM COLEMAN (R), MINNESOTA: We really have made major reform here, long in coming, well done. This will make America safer.

ANNOUNCER: Welcome to the new world of intelligence sharing. We'll investigate what's in the intel bill and what's not.

SEN. JOHN MCCAIN (R), ARIZONA: Clearly some of these athletes can be blunt or spoiled brats.

ANNOUNCER: The world according to McCain. Judy talks with the senator about everything from intel and Iraq to steroids in sports and election '08.

Now, live from Washington, JUDY WOODRUFF'S INSIDE POLITICS.

(END VIDEOTAPE)

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us.

We begin with a new twist: the Bush cabinet shuffle. This time an official who some speculated was on the way out actually is staying. We were going to go in just a moment to CNN's Dana Bash, but the person we're talking about is Treasury Secretary John Snow.

Much speculation in recent days because of comments from top administration officials that John Snow would not be sticking around, that the president would be naming someone to replace him. But as we have learned just in the last few moments, the White House is saying the president has asked John Snow to stay on, and he will do so.

For the latest, let's go to our Dana Bash at the White House.

Hi, Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Hi, Judy.

Well, White House spokesman Scott McClellan said that the president, right after a weekly lunch with his economic team, pulled John Snow aside. And we're told that he took him into the Oval Office and said that he would like him to stay on into his next administration, into the next term, and that John Snow accepted.

As Scott McClellan saying, that he is honored that Secretary Snow is staying on, saying that he's a valued member of the economic team. Of course, as you well know, Judy, this is somebody, a top member of the Bush cabinet who has had a lot of speculation surrounding him and his tenure in this administration.

Several media reports all but saying that he is absolutely gone. And certainly administration sources have been coming under a lot of pressure to decide and publicly say what Secretary Snow's fate would be. And now we know it to be the case that he actually staying on.

And I can tell you that just over the past several weeks, administration sources, in talking to them, have been reluctant to say yay or nay, which has been a different kind of thing for other high- profile members who are staying. For example, Secretary Rumsfeld, there was no question that he was going to stay on when talking behind the scenes to some administration officials.

But now they are making it public. And certainly this is somebody who the president is going to be relying on tremendously, because major parts of his second-term agenda are focused on economics, tax code reform, Social Security reform. And these are issues that they're going to need Secretary Snow to go to Capitol Hill and really, really work hard for.

That is why some thought maybe he would not be Mr. Bush's pick, that perhaps they wanted somebody, not a railroad executive, as John Snow is, somebody who perhaps knows Capitol Hill a little bit better. But again, today they decided that John Snow will stay on, and he's accepted -- Judy.

WOODRUFF: Well, they did leave it out there undetermined for a few days. So maybe we can find out later what that was all about.

All right. Dana, thank you very much.

BASH: Thank you.

WOODRUFF: Well, now we turn to the intelligence reform bill. It's not exactly a pins and needles vote, but anticipation is building as the Senate moves toward expected passage more than three years after the September 11 attacks. Here now, our congressional correspondent, Ed Henry.

Hello, Ed.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Good afternoon, Judy.

In fact, they have just started calling the roll a few minutes ago in the Senate. That vote has started, as you said, expected to sail through. This is a classic Washington story.

Congress can often move at a snail's pace, endless delays. But once there's a breakthrough, look out, it's a locomotive. This bill was speeding through the House last night, now expected to speed through the Senate. But there was one last behind-the-scenes scuffle before this Senate vote.

We're told that many senators have already headed home for the holidays, and they were privately urging Senator Majority Leader Bill Frist and other leaders to schedule this as a voice vote so they wouldn't have to fly back to Washington, since it is going to sail through anyway. But we're told that a lot of traditional senators, like Robert Byrd, insisted that this is such a historic vote that each senator should come back and vote. Whether it's 100 to nothing or not, they should be here and they should be recorded as voting.

So that's what's happening as we speak right now. You can see those live pictures.

And, in fact, many lawmakers are focusing on the historic nature of this vote, of this expected passage, and onto the president's desk. The president expected to sign this as early as this week into law, more than three years after the 9/11 terrorist attacks. And, in fact, one of those lawmakers who actually wrote the bill, Senator Joe Lieberman, said today that this legislation, which is now going to become law, will help prevent future terror attacks.

(BEGIN VIDEO CLIP)

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: It failed us. And to keep the status quo going is to invite the kind of failure that will bring about more attacks.

We can't accept that. We've given some tough new powers to this national intelligence director, and I'm just bottom-line confident, as is Tom Kean, Lee Hamilton, the president, and the majority members of both members in Congress, that we're going to get more for the billions we're investing in intelligence after this bill becomes law.

(END VIDEO CLIP)

HENRY: And, Judy, we are now piecing together the behind-the- scenes details of how this deal was finally cut. It turns out that when Republican Congressman Duncan Hunter over the weekend came up with some new language on that chain of command question, the difference here in how the new director of national intelligence director would work with the Pentagon, we're told when he sent that legislation and that new language in the legislation over to Senator Lieberman and Republican Senator Susan Collins, it was on Sunday that Lieberman and Collins started taking out their BlackBerries and actually e-mailing each other some tweaks of that language.

But unfortunately for Senator Lieberman, he had already plans to go to the Kennedy Center for the black-tie affair, those Kennedy Center honors, where Warren Beatty, Elton John and others were being honored. So Senator Lieberman told me today that he was there. He decided to turn off any -- any noise, any sound from it, but he had a red light that told him every time he got a new message from Susan Collins. He finally got the language that sealed the deal eventually during Billy Joel's song tribute to Elton John. And Senator Lieberman told me after the deal was sealed he finally sent a BlackBerry message to Senator Collins: "Imagine what Webster and Clay could have done with BlackBerries."

So that's how the deal was sealed -- Judy.

WOODRUFF: It's sure a great ad for BlackBerries.

HENRY: That's right.

WOODRUFF: All right. Ed Henry, thanks very much.

HENRY: Thank you.

WOODRUFF: Well, after all the language parsing and arguing about the intelligence bill, the big changes it will make may have gotten lost in the shuffle. Our national correspondent, Bruce Morton, looks at what is in the bill and what was left out.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice-over): The 9/11 Commission found that U.S. intelligence was scattered before the attacks. Fifteen agencies, each keeping its secrets. The bill would try to fix that by appointing a new director of national intelligence who would see the whole intelligence picture.

LIEBERMAN: And what this bill will do to make the American people safer, bottom line, is to put a director of national intelligence in charge for all of the sections of our system which are spending billions and billions of dollars of taxpayer money to work together, see the attacks before they're coming, and stop them.

MORTON: The new director will control most of the $40 billion or so the U.S. spends on intelligence each year, but not the budget for military intelligence. He will not be in direct contact with spies or analysts, and will not have total control over Defense Department agencies, which are mostly satellite and eavesdropping systems. And he may have to share access to the president with the director of a new National Counterterrorism Center, which the president created by executive order last August, but which is also in the bill.

Other provisions, the bill would add at least 2,000 border patrol agents and 800 Customs agents each year for five years. It would make it easier to surveil and wiretap lone wolf terror suspects not linked to foreign countries or groups.

The bill requires states to follow uniform standards in issuing drivers' licenses. It would require visa applicants to have personal interviews, would authorize tighter aviation security programs like screening carry-on luggage for explosives.

The bill would establish a privacy and civil liberties boards, review federal practices in that area. It would set up an intelligence director at the FBI and require training a number of agents to do domestic intelligence work rather than the bureau's traditional task of gathering evidence in criminal cases.

(on camera): But the real question probably is, can the new director manage his territory, really get all the agencies to work together and share information? And the answer probably is, we just can't know yet. We'll have to wait and see how the new system works out.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Senator John McCain of Arizona was one of those pushing for this intelligence reform bill, but when I spoke with him a short time ago, I asked him whether he is satisfied with the way the new intelligence director's job is going to be set up.

(BEGIN VIDEOTAPE)

MCCAIN: Well, I think it's something that needs to be done. All of these agency heads needed the support of the president. There is a consolidation here which I think is important. But I think the primary point here is the status quo was not acceptable.

The record of our intelligence agencies was exceedingly poor, and these are the recommendations of the 9/11 Commission, supported generally by most experts. But we've also got to change the culture, as well as the boxes in the organization chart.

WOODRUFF: What about the concerns raised in the House by Congressman Sensenbrenner and others who think there's just not enough in this bill to make the borders of this country secure, to tighten immigration rules? What do you say to them?

MCCAIN: Well, the -- this legislation, as I understood it, was to reorganize our intelligence capabilities to make them more efficient and give the president the best information upon which to base decisions on national security. But I think they have a very legitimate point.

Immigration reform should be a top agenda item for next year. And border control is a critical aspect of it. My state is devastated by illegal immigrants coming across our border. But it has to be a comprehensive immigration reform because we learned on the war on drugs, if there's a demand there's going to be a supply.

And right now there's a demand for workers and there's a supply of them. So we have to have a guest worker program, as well as tightening all of our immigration procedures, including drivers' licenses if necessary, although that gets into some pretty sticky civil liberties areas.

WOODRUFF: Thoughts on who the national intelligence director should be? There are names floated around from your colleague, Senator Lieberman, to Porter Goss, and others. What do you think? MCCAIN: That's clearly up to the president. But I think Joe Lieberman would be a good person for the job, as would be Susan Collins. Both of them, I think, are immersed in these issues and have a lot of experience in it, but I'm sure there's a lot of other very highly qualified people around.

(END VIDEOTAPE)

WOODRUFF: As for the situation in Iraq Senator McCain says he doesn't necessarily like what he sees. Up next, McCain taking exception with Defense Secretary Donald Rumsfeld and the way he's deploying troops and extending their tours of duty.

Also ahead, a new sign of John Edwards' intentions in 2008?

And later, Dr. Dean's prescription for the Democratic Party. Will it help or hurt him in the running for DNC chairman?

(COMMERCIAL BREAK)

WOODRUFF: Defense Secretary Donald Rumsfeld today faced some tough questions from American soldiers at a base in Kuwait. Rumsfeld was asked about armor shortages for military vehicles, as well as the so-called Stop-Loss program that prevents personnel from leaving the service even if their enlistments are over.

Here in the U.S., Senator John McCain is among those who have raised similar questions about the U.S. mission in Iraq. In part two of my interview with McCain, I asked him about the upcoming Iraqi elections and about his sense of how secure the country really is.

(BEGIN VIDEOTAPE)

MCCAIN: I think we're in a very, very difficult situation. I think it's going to be a close call as to whether we can carry out these elections or not. I do think, in many respects, the situation has worsened. It all goes back to not enough boots on the ground for a long period of time, but we have to win. We must prevail, and we've got to do whatever is necessary, and I don't believe we can delay the election. We need to have it.

WOODRUFF: 150,000 troops are going to be there. How many more should be there?

MCCAIN: It's hard for me to be that expert, but I would say at least 20,000 or 30,000 more, but the fundamental point is, we've got to expand the size of the army by some 80,000 people. We've got to expand the size of the Marine Corps by 20,000 to 30,000, so we aren't putting such a strain on Guard and reservists and on active duty people so we don't have to extend them on active duty or call them back after they've left active duty. We've got to increase the size of our military. That's very expensive. We may have to give up some toys in order to do so.

WOODRUFF: Well, speaking of that, Secretary Rumsfeld over speaking to troops in Kuwait today was asked by the troops themselves how much longer the army is going to use this stop-loss power to prevent soldiers from retiring or getting out of the service. He basically said, you know, in so many words, this is a fact of life during war. Is he right about that?

MCCAIN: No, that's not necessary. We should recruit and can recruit highly-qualified men and women to serve in our military. We've got to expand the size of the military in order to handle a situation we're going to be in for many years, and stop-loss is a terrible thing for morale. Extending people after you tell them they're going to come home on a certain date is tough on morale. Our Guard and reservists are now about 40 percent of our forces over there, and it's very, very tough on them. That's not their primary mission.

So we've got to do it and we've got to do it soon, otherwise we're going to have a long period of very difficult experiences in Iraq, and we're not going to be able to address other crises if they arise.

WOODRUFF: Senator, Secretary Rumsfeld was also asked by the same troops today, why there still is not sufficient armor on the vehicles that they are using, they're apparently having to go into scrap heaps to look for sufficient metal. We're almost three years now since the start of this war, and again, Secretary Rumsfeld said, well, you can have all of the armor in the world on a tank. It can still be blown up.

MCCAIN: Well, all I can say is that perhaps we ought to address that in the hearings next year with the secretary. On his behalf, there is changing aspects of war. It's a different kind of insurgency we're fighting now, which requires different types of equipment. But I am convinced that he and the president and the Congress want to get to these men and women in the military everything they need as quickly as possible.

WOODRUFF: Well, is that -- I mean, are you satisfied as a senator who -- someone who has paid close attention to the armed forces in this country, that the soldiers themselves are asking for better armor?

MCCAIN: Some complaining on the part of the military is always healthy. I think it's important for them to have that ability, and I'm glad they were able to communicate with the secretary of defense. I think obviously any complaints they have needs to be looked into. I also think the larger issue here is, do we have sufficient boots on the ground. For example, in Falluja, we've done a magnificent job. Now, do we have enough troops to stay there and make sure it doesn't become a sanctuary again.

WOODRUFF: Senator, you said in an interview on Sunday, that in effect your comments about Secretary Rumsfeld staying on did not add up to a vote of confidence. Who do you think should be in that job?

MCCAIN: I really don't know, Judy. It's the president's decision to keep Secretary Rumsfeld. I will agree with that. I will work with Secretary Rumsfeld as hard as I can for the good of this nation, and I respect the president's decision to keep him.

WOODRUFF: What about the rest of the cabinet changes? Is this shaping up to be a strong second term for President Bush?

MCCAIN: I think so. I think the president has got a team now that he knows and trusts, and again, elections have consequences, and certainly one of the first consequences is a president selects his team. I support it.

WOODRUFF: Speaking of elections, Senator, it's been noticed that you are already planning to be in New Hampshire. You've, you know, made it clear, I think, to a number of people that you're not at all ruling out 2008, a run for president again. What is your thinking right now on that?

MCCAIN: My thinking is I went to New Hampshire a couple of weeks after the election, agreeing to a many months old request by the publisher of the "Manchester Union Leader."

So I was glad to go there and see a lot of old friends. I have no contemplation for the next couple of years to do anything except be a good senator.

WOODRUFF: If you were to make that decision, when would you have to make it?

MCCAIN: Well, I'm sure it would be two or three years from now. I don't think I can help the people of Arizona by planning and plotting to be president of the United States when the present president hasn't even been inaugurated for a second term.

WOODRUFF: But there are people who are talking to you about it.

MCCAIN: I think that one of the commodities in abundance here in Washington is chatter.

WOODRUFF: Senator, one last thing. You, in a serious subject, you have spoken of the need to have Congress possibly step in and challenge baseball's historic anti-trust exemption if they don't address the problem of steroids. Are they addressing it?

MCCAIN: They are and by the way, I have great admiration and friendship for Don Fehr. I think the baseball players' organization gets it. I think they're moving forward. I intend to maintain communication with him. I do not want to legislate, and I'm encouraged by the signs of progress that are being made.

WOODRUFF: So -- at this moment, the ball's in their court?

MCCAIN: Oh, yes. I mean, we couldn't do anything before January anyway, and wouldn't. I want to give them time to work this out. Hey, they get it, Judy. They know that it's harming their sport, and the fan attendance upon which they depend and they know it's wrong and they know it's cheating. I am guardedly optimistic that you'll see some significant progress made. WOODRUFF: And finally, Senator, more broadly, the violence that we have seen at some sporting events, basketball, it's all in the news right now, where the players go into the stands to fight with the fans. Should these players -- should they be subject to the same punishment as a common criminal on the street?

MCCAIN: If they commit a crime, absolutely. If they throw a chair and hit a woman in the nose and break her nose, it's happened in a baseball brawl, absolutely. But I also think that we've got to enforce better behavior on the part of the fans. You go into a game gives you the right to boo. It does not give you the right to racially insult anyone, nor does it give you the right to hurl a drink or anything else on one of the participants. They have rights as well. Clearly some of these athletes, to be blunt, are spoiled brats. There's many others that are mature, wonderful individuals and wonderful role models. But we got to enforce athletes' behavior but we also are going to have to curb the behavior of the fans as well.

(END VIDEOTAPE)

WOODRUFF: Senator John McCain. I talked to him just a short time ago.

And we can tell you that the United States Senate voting on the 9/11 intelligence reform bill that right now, as of now, a majority of the Senate has voted for this bill, which means it will be enacted into law upon the president's signature. The voting is still under way. It's not over yet, but right now a majority has voted in favor, meaning it heads next to the desk of the president.

Well, speaking of the president, he's keeping a close eye on that controversy over sports and steroids. I was just talking to John McCain about it. Up next, details on how the White House is keeping tabs on efforts to strengthen testing for performance-enhancing drugs.

(COMMERCIAL BREAK)

WOODRUFF: President Bush is weighing in on the steroid scandal. The White House says Mr. Bush wants Major League Baseball and the players union to agree on tougher testing for steroids. The president, who is a former baseball team owner, spoke about the steroids problem in his State of the Union Address last January. The White House says one of the president's former baseball partners is acting as a liaison with Major League Baseball.

Question: what do Bono and Brad Pitt have to do with politics? We'll tell you why they're teaming up, coming up later on INSIDE POLITICS.

Plus, is Howard Dean back? We'll tell you about the doctor's prescription to cure the Democratic Party.

(COMMERCIAL BREAK)

WOODRUFF: It is just before 4:00 in the East. And as the markets get set to close on Wall Street, I'm joined by Lou Dobbs in New York with "The Dobbs Report."

Hi, Lou.

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Hi, Judy. Thank you.

Stocks today finishing higher. And the dollar had one of its best rallies in months as the final trades are being counted.

The Dow Jones industrials up just over 50 points. The Nasdaq is half a percent higher on the day. And the dollar, which has been tumbling of late, gained ground against both the yen and the euro. Oil prices up slightly on the day but stayed still below $42 a barrel.

A new report out of UCLA, however, said the hot housing market may be a problem. A bubble that could burst, in fact. The authors say that that could pose the biggest risk, in fact, to our nation's economy. In this study, economists warn soaring home prices around the nation can't last in a rising interest rate environment unless incomes also rise substantially. If the housing market does have problems, the report says it would depress the construction industry and eventually slow overall economic growth.

The rumored deal between IBM and Lenovo is now official. IBM has agreed to sell its PC business to the Chinese computer maker for $1.25 million. That deal will make Lenovo the world's third largest PC maker and land it in the very important world's richest consumer market, that is the U.S. market. Lenovo plans to set up headquarters in New York City. The largest acquisitions ever by a Chinese company.

Coming up here on CNN, at 6:00 Eastern tonight on "Lou Dobbs Tonight" our special report, culture in decline. We're looking at a decline of a common language in this country. A huge number of Americans now can't speak English and the government is doing nothing to encourage them to learn English. It has become a barrier to assimilation in American society.

(BEGIN VIDEO CLIP)

JIM BOULET, JR., ENGLISH FIRST: What we have is the government is saying don't bother to learn English, we'll tell you everything you need to know. If you want to vote, here's your bilingual ballot, if you want to apply for welfare, here's your Spanish language form.

(END VIDEO CLIP)

We'll be examining that issue in-depth tonight. Also, the Senate expected to pass the intelligence reform bill today without providing for border security nor tougher regulation against illegal aliens. My guest tonight is Congressman Peter Hoekstra, chairman of the House Intelligence Committee, also among those who is reported to be being considered to head up the national directorate of intelligence.

And then, a growing number of doctors are simply fed up with pharmaceutical companies who are pushing pills on them and their patients. We take a look tonight at how some of those doctors are fighting back. And defending your freedom. A number of journalists could face jail time for protecting their confidential sources, among them "New York Times" writer and Pulitzer Prize winner Judith Miller. She's standing strong. She's been found in contempt of court for refusing to reveal her sources. Today in court, appealing the ruling. She's our guest tonight. We hope you'll join us.

Now back to Judy Woodruff in Washington -- Judy.

WOODRUFF: Lou, you mentioned the intelligence bill. We've both been reporting, it's about -- it's on the verge of winning passage from the Senate. What's your sense of that, is it your understanding that it is going to make the country safer?

DOBBS: It is, at least in terms of architecture, a far better plan and result. In terms of actual intelligence gathering and analysis, we're going to have to wait and see. We have another commission that is coming forward with an analysis of our -- an analyst intelligence in this country, that led by Larry Silverman and former Senator Chuck Robb. So we'll have that at the beginning of the year. In point of fact, there are other issues that are critical, not to suggest that this isn't. But first and foremost among them in the opinions of many, including my own opinion, frankly, Judy, border security, port security, absolutely critical to defending the country.

WOODRUFF: We know a number of the members of the House of Representatives feel very strongly about that. OK.

DOBBS: Absolutely.

WOODRUFF: Lou, thank you very much, we'll see you at six.

DOBBS: Thank you, Judy.

WOODRUFF: INSIDE POLITICS continues right now.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: We worked hard to get this thing done.

ANNOUNCER: The battle over intel reform. Who are the winners and losers in this bruising political fight?

UNIDENTIFIED MALE: This bill was castor oil for conservative House Republicans.

(APPLAUSE)

ANNOUNCER: Howard Dean shares his vision for the Democratic party. Is it his campaign speech for DNC chairman?

HOWARD DEAN (D), FMR. PRESIDENTIAL CANDIDATE: The way to rebuild the Democratic party is not from the consultants down, it is from the ground up.

WOODRUFF: Welcome back. The White House says President Bush is greatly looking forward to signing the intelligence reform bill about to clear Congress. At this hour, a majority of senators have approved the bill, although technically voting still is under way. This comes just one day after the measure was overwhelmingly passed by the house. As one senator put it, advocates and opponents of the bill have taken a long and winding road to get to this point. And as CNN's Kelly Wallace reports, some have come out looking better than others.

(BEGIN VIDEOTAPE)

KELLY WALLACE (voice-over): By now, you may recognize their faces. They are the biggest winners in this fight, those family members who launched a full-court press for change, like Beverly Eckert, whose husband Sean (ph) was killed in the World Trade Center attacks.

BEVERLY ECKERT, 9/11 WIDOW: It's been three years. This country has waited long enough.

WALLACE: The biggest losers, the man who calls himself the skunk at the garden party...

REP. JAMES SENSENBRENNER (R), WISCONSIN: And this bill is lacking and incomplete.

WALLACE: ... House Judiciary Committee chairman James Sensenbrenner, who did not get the tougher immigration measures he wanted, and House conservatives who never thought much of the bill in the first place. But losers in this battle will be emboldened for the next one.

ED HOLLINS, GOP STRATEGIST: It won't be just the president saying, you know, here's what I want and go do it, especially on the two complicated issues of tax reform and Social Security reform.

WALLACE: As for the president, he's both a winner and a loser. Here's why. This is a bill he was never overly excited about but ultimately decided it was something he had to have.

ALLAN LICHTMAN, PRESIDENTIAL HISTORIAN: It was absolutely necessary for George Bush to get this bill through the Congress to discipline his Republicans and to start his new administration on a note of success, not failure.

WALLACE: The biggest question mark, will American security be a winner or a loser? Critics say the bill is nothing more than reshuffling the bureaucracy. Even the bill's most passionate supporters say it won't necessarily prevent another terrorist attack.

LICHTMAN: So remarkably, despite all the pressure to pass this bill, it is uncertain whether it will make us one bit safer.

(END VIDEOTAPE)

WALLACE: Still, it is the biggest change in the intelligence agencies in 50 years and something that might not have ever happened had it not been for those family members who bonded together in grief and never stopped fighting. Kelly Wallace, CNN, New York.

WOODRUFF: Thank you, Kelly. Well, President Bush hasn't wasted any time in signing another crucial piece of legislation, sent to him by Congress just yesterday. The $338 billion spending bill covers every federal agency but the Pentagon and the Department of Homeland Security. Lawmakers actually passed the legislation last month, but they put off sending it to the president until they took out a controversial measure that would have made it easier for some members of Congress and their aides to see Americans' income taxes returns.

Now we turn to the future of the Democratic party and how Howard Dean figures into it. Here in Washington today, the former presidential candidate laid out his vision for the party. To some listeners' ears, it sounded liked a campaign speech for the job of Democratic Party chairman.

(BEGIN VIDEOTAPE)

DEAN: The way to rebuild the Democratic party is not from the consultants down, it is from the ground up.

DEAN: And the White House, yes... We're going to win in Mississippi and then we're going to win in Alabama, we're going to win in Idaho.

WOODRUFF: Dean says Democrats need to run a 50-state campaign and refuse to cede much of the West and the South to Republicans. It's a point he has made before, but famously got into trouble by bringing the Confederate flag into it.

DEAN: White folks in the South who drive pickup trucks with Confederate flag decals in the back ought to be voting with us and not them.

WOODRUFF: Now, Dean argues, that Democrats can broaden their reach by embracing the party's traditional principles, from healthcare to education to social responsibility. Dean says those are moral values.

DEAN: We cannot win by being Republican-lite. We've tried it, it does not work.

WOODRUFF: As party officials prepare to meet in Florida on Friday, plenty of top Democrats are musing about where the party should go and who should be its leader. Dean has his supporters. He'd be a frontrunner if he joined the campaign to be the next DNC chairman. But the platform he laid out in this speech, which barely touched on national security, may not sit well with the move-to-the- center camp. They are still smarting after watching John Kerry and Howard Dean before him tarred by Republicans as Northeastern liberals.

SEN. EVAN BAYH (D), MONTANA: I don't think the American people will trust a political party with leadership if we are not viewed as being adequately strong on national security. And we have to do more than just mouth the words.

(END VIDEOTAPE)

WOODRUFF: Some Democrats have reservations about Howard Dean for another reason. They want assurances that if Dean were to get the DNC chairman's job, he would not use it as a launching pad for another presidential bid.

Well, as both parties plot their futures I'll ask insiders Mark McCurry and Mark McKinnon for their political perspective, a bit of it, but mainly we'll discuss their joint fight against the AIDS epidemic.

And later Al Sharpton fires back denying a report about his personal life.

(COMMERCIAL BREAK)

WOODRUFF: There is a new nationwide effort under way to galvanize U.S. support for the worldwide battle against AIDS. The mission is spearheaded by the one campaign. It's a group whose goal is to boost U.S. spending on anti-AIDS programs to 1 percent of the total U.S. budget. With me now to talk more about this are Mike McCurry, a former White House press secretary and former adviser to the John Kerry campaign, and Mark McKinnon, longtime media adviser to George W. Bush.

Good to see both of you. You both spent an awfully long time working for completely opposite visions of where this country should be headed politically. Was it that easy to put all that aside and work on this, Mark?

MARK MCKINNON, BUSH MEDIA CONSULTANT: Yes, it really was, Judy. This is not a red or blue state issue, this is really a purple issue. This is -- there really is no partisan divide when it comes to this issue and the research out today, it was reported that almost 90 percent of Democrats and Republicans care passionately about these issues. And so this is actually a classic compassionate conservative issue because we're demonstrating under the president's leadership that we care about people around the world, we care about these issues but also that we're demanding accountability and we're getting results. WOODRUFF: But Mike McCurry, there are so many goods causes out there, so many worthy causes, why this one?

MIKE MCCURRY, KERRY CAMPAIGN SR. ADVISER: Well, it's pretty compelling when you think 6,000 kids a day are dying in Africa. It really compels our attention as an urgent moral matter. You know, there's been a lot of discussion since the campaign that we both fought against each other and about the role that faith and religion plays. Well, this is one in which it's very clear people who respond morally are both Republican and Democrat and Independent and they find very urgent the need for America to go express itself and use some of its economic power and might to deal with poverty, injustice and the problem of AIDS.

WOODRUFF: What do you realistically think you can accomplish here, Mark?

MCKINNON: Well, I like to point to the fact that it was a couple of years ago that the president dispatched Bono and treasury secretary Paul O'Neill to Africa and I had the privilege to be on that trip. But that was when he, the president, was investigating, it was really a scouting trip for what is called the millennial challenge account which effectively increases by 50 percent our foreign assistance but it does it in an entirely new way which holds the nations accountable for their spending and their criteria finally for -- for getting these funds.

So -- and Bono's team just went back recently in the last couple of weeks with Brad Pitt and the same people we visited two years ago that were not getting ARV drugs are getting them today.

So what's happening is that the need is great but we're also showing that the programs and the initiatives that have been launched by the president are really working.

MCCURRY: Right, and Judy, what I'd add to that is through the generosity of the Bill and Melinda Gates Foundation which is actually funding part of this one campaign we're going to go out and create an America, a constituency that can help Democrats and President Bush do what we need to do on AIDS. There are 11 different groups that are participating in this one campaign. They're sharing a common agenda. And what they want to do is share their resources together to go out and show the elected leaders of our country that there's a political constituency that's out there. Very often here in Congress, people who work on foreign policy or international issues, they don't get appreciated by their constituents. We want to give them some of that appreciation they need.

WOODRUFF: Mark McKinnon, quickly, people are giving this President Bush credit for what he's done with regard to AIDS but you've also got people saying not nearly enough money is being spent, that there are promises and I don't want to go into too many of the details about the different funds that have been set up but they haven't been fully funded.

MCKINNON: Right. WOODRUFF: How can people be sure the commitment is there when the cause, the need is so huge?

MCKINNON: Well, let me just tick off three quick things. First of all, this is now the largest commitment ever by a single nation on an international healthcare initiative that the president has sponsored. Two, the United States is contributing more than any other nation combined in the global effort on AIDS. And plus we've increased our assistance on this issue by 50 percent. To your point, this effort is bringing needed light on these issues and awareness so that Congress and other global nations meet the challenges that the president has set out. It's important that that happens.

WOODRUFF: But at the same time, Mike McCurry, you have the war in Iraq, you have so many domestic needs here in the United States with regard to health, education, we could go on and on. Today Secretary Rumsfeld was asked by the troops themselves about not having enough armor on their vehicles. I mean, everywhere you look there's a need.

MCCURRY: The name of the campaign says it all. The one campaign, 1 percent of our federal budget, only 1 percent extra which is about 25 billion annually could meet the needs and the commitments the United States should make. It would make a huge difference to kids who are suffering. It would make our country more secure. We know that from some of the research that Mark and I participated in releasing today. And more importantly, it really responds to the values of who we are as Americans. It really, I think, would start putting America's best foot forward in the world and that's something we need to do.

WOODRUFF: I can't have both of you here without asking you at least one political question.

So let's be very blunt. Mark McKinnon, are the Democrats permanently consigned to minority status in this country?

MCKINNON: The thing I was just visiting with Mike about earlier was that the real problem for the Democrats is not that they ran a bad campaign or had a bad candidate. They had a good candidate, a really good campaign and all the money in the world, totally united, and they still lost, so that's got to be incredibly demoralizing.

WOODRUFF: Is it demoralizing?

MCCURRY: Demoralizing, we came very close. We ran a very good campaign. But more importantly I think we taught ourselves something about what it takes to win in the 21st century. We can't just rely on turnout and rely on the old traditional base of the Democratic party. What the Republicans, to their credit, and Mark and Karl Rove and others went out and made new Republicans. We've got to go out and make new Democrats. I think that's, I hope, what our candidates for party chairman are going to took focus on.

WOODRUFF: But you don't want them to come roaring back, right? MCKINNON: Well, I think the problem really is that it's not so much about the candidate or the party. It's about your message. We had a president with a compelling message and that's how people got motivated.

MCCURRY: I think we need -- we have a very strong brand. The Democratic party is the oldest political party on earth and we need to reinvigorate that brand and if we do I think we'll send Mark packing.

WOODRUFF: OK.

MCKINNON: Claw their way to the bottom.

WOODRUFF: But on this campaign, all about AIDS, the one campaign you're working on together and we thank you for...

MCKINNON: Judy, we're saving thousands of lives every day but thousands are still dying.

MCCURRY: We need more bipartisanship in this town and here's a good example where people can work together.

WOODRUFF: You couldn't ask for a better example. Mark McKinnon, Mike McCurry, thank you both. We appreciate it. Good to see you. We wish you well with this.

A number of elected officials are eying races for higher office. We'll tell you about the contenders straight ahead. Also 2008 is a long way off -- or is it? We'll update a well-known Democrat's travel plans to New Hampshire when INSIDE POLITICS returns.

(COMMERCIAL BREAK)

WOODRUFF: Taking a look at what we're calling today's political bytes, John Edwards will be the keynote speaker at a New Hampshire Democratic party fund-raiser in February. Edwards has agreed to attend the event with his wife, Elizabeth, in the state traditionally home to the first in the nation's presidential primary.

The surprisingly strong write-in campaign for San Diego mayor by City Councilwoman Donna Frye has fallen short. A state appeals court has cleared the way for the incumbent, Dick Murphy, to be sworn in for a second term. The final tally shows that Murphy defeated Frye by 2,100 votes.

Several elected officials are said to be considering runs for other offices. Nebraska Congressman Tom Osborne said he will announce next month whether he'll challenge Democratic Senator Ben Nelson in 2006.

"The Hill" newspaper reports undersecretary of homeland security Asa Hutchinson will announce next month that he plans to resign to run for Arkansas governor in 2006. Hutchison, a Republican, is a former Arkansas Congressman.

In Florida, the "St. Petersburg Times" reports that Democrat Betty Castor has spoken to fellow Democrats about running for governor in 2006. Castor narrowly lost a Senate bid last month to Republican Mel Martinez.

In New York, a new Quinnipiac poll finds state Attorney General Eliot Spitzer leads incumbent George Pataki by double digits in a hypothetical matchup for governor there in 2006. However, against Colin Powell, a native New Yorker who has not said he plans to run, Spitzer trails by five points. Governor Pataki also trails Senator Hillary Rodham Clinton in a potential head-to-head matchup for her New York Senate seat. Senator Clinton also leads Colin Powell, though by a much smaller margin in a hypothetical race for that spot. Got all that?

Former Democratic presidential hopeful Al Sharpton is denying allegations in New York's "Village Voice" newspaper that Sharpton appears to have engaged in an extramarital affair with a top member of his staff. In his statement, Sharpton vigorously denied the "Village Voice" report and he said he's seeking what he called, a, quote, "dignified and respectable separation from his wife." He also compared the "Village Voice" article to efforts by former FBI director J. Edgar Hoover to smear Dr. Martin Luther King, Jr.

A reminder, Al Sharpton will be a guest host on CNN's "CROSSFIRE" just minutes from now at the bottom of the hour. INSIDE POLITICS will be right back.